mr. rose can we go to the revised budget report? >> on page 53 recommended reduction is 38,631 in 13-14 and on 14-15 are recommended reductions totaled again 38,641. >> supervisor farrell: thank you very much mr. rose any questions .? any motion to approve the recognitions? we do so without opposition. (gavel) we can do adult probation? >> supervisor farrell: are you in agreement this time?

>> almost. we do have an item in discussion. you like for us to go down or come back? >> supervisor farrell: do we have adult provision here? go ahead. >> we have worked very closely, we appreciate the budget analyst discussion and working together and also the mayor's budget analyst. the majority of the items we are on agreement on. there is one ask that i have, reduction proposed of 95,833 as it realtes to mother/infant cameo house alternative sentencing program and under the projected decrease of 42,294, i am not in disagreement introducing these amounts because of delays,

takes time to bring it online but the concern is that this is ab109 money directly in have great needs for services that if there will be a reduction in these items it is not because there is not a vast need for services. 109 money should be absolutely reinvested and their statute language that requires that at the state level so my ask is for these two dollar amount that are opposed to be reduced that they would be reinvested so that we can procure more housing and/or substance abuse services which we have 86% and 62% of the need. >> any department can come before you and say they agree with the recommendations but they want to use them for something else. normally the position of the budget and finance committee has been and that in the add-ons, if they do type that is a priority of the board of supervisors they would add that

back rather than not accepting the budget analyst recommended cuts. the department saying that the agreement the cuts but they should use it for something else. every department can do that and you would wind up with no cuts. >> supervisor farrell: mr. controller? >> is aniston the chief is saying she is arguing that a portion of the revenue that fits under these reductions have to be legally expended only for those reductions. she is in agreement with the budget analyst. one suggestion for the committee would be to adopt the budget analyst recommendations in terms of expenditure reductions. we can work with the department of the tournament whether there is a legal restriction on these funds. if there is not will return it to the general fund as part of the final deliberations. if it is legally segregated we can report that act of the committee and you can pick it up on the final actions on the budget. >> supervisor farrell: supervisor avalos? >> supervisor avalos: is a way that analysis can be provided

in the next day? or would that take more analysis? >> i think we can resolve that today. >> supervisor breed: i think you said what i'm going to ask about specifically -- i understand that there are certain limitations. i did not necessarily here that those limitations are specific just to that particular position but there are other areas in which those funds could be used for within your budget. >> right. i'm actually proposing to leave those in the same area which is professional services. that's how we basically procure our housing. i'm not asking to go outside of the area. it is just as the city for service needs. >> supervisor breed: okay. and would like to if at all possible and i think supervisor avalos has asked this, i would

like to take it is the general fund reduction and they're working on that, correct? >> supervisor farrell: i think the choice supervisor is what we can do right now for the controller's suggestion is we can accept the budget analyst recommendations. we'll hear back within the next 20 for hours whether the funds can be returned to the general fund or whether they have to sit in a ab 109 stunning category if you will. >> for the record, i do not repeat recommended reductions in 13-14.. the total is 403,452, and in 14-15, 188 12. >> supervisor farrell: i might suggest that, accepted budget

analyst recommendations and would have for the discussion on this item tomorrow morning. we can do so without opposition. (gavel) >> supervisor farrell: okay, up next ms. sou -- (sounds like) from dcyf? >> good morning, maria sou, department of children and youth and families. this a great morning and wonderful day for us in san francisco and us in the country. after further conversations with the budget analyst office we have come to an agreement and will accept the proposal for the budget analyst's office. >> supervisor farrell: colleagues any questions at this time?

why do we hear from mr. rose and your updated report. -- >> mr. chairman, numbers of the committee on page 74 of the report, recommended reductions are -- and for 14-15 total 269,256. >> we want to clarify in our recommendation that 350,000 of the recommendation is a general fund reduction. the balance is the children's fund reduction available for reappropriation, of the children fund's program.

>> supervisor farrell: -- supervisor breed? >> supervisor breed: for clarity, so the city grant program, is that the children fund's reduction here? hone for 250,000 another for 150,000? >> that's the general fund reduction. >> supervisor farrell: mr. rose would you like to give us more specificity? >> those are general fund recommendations, the 350,000 but we are referring to which the department agrees with. >> supervisor farrell: any questions or comments? to have a motion to approve

the budget analyst recommendations? okay. supervisor breed, can we do that without opposition? so moved. (gavel) thank you. we have the department of public health here, barbara garcia, greg wagne and team. >> good morning. chair farrell and supervisors. -- garcia supervisor of health. after we worked with the budget analyst's office we are ready to say we are in agreement today. >> supervisor farrell: thank you ms. garcia. mr. rose wonder we go to the updated dp report. >> on page 83, for 13-14

recommended reductions are 1,139,136, and in 14-15 1,213,260 which is that -- those are again general fund reductions. >> supervisor farrell: thank you mr. rose. any questions for mr. rose or ms. garcia or anyone else at dph? supervisor mar. >> supervisor mar: ms. garcia, yesterday at the board of supervisors meeting the number of people testified about the concern about acute psychiatric services especially in year 2 and what the plans are for making sure that we are adequately supporting communities in need and i am

just wondering if you could respond? >> with the mayor's mental health cuts -- we believe that we are trying to meet the needs of the community as well as the san francisco general discharge ability. medicare cut -- we cannot have anyone to long in a psychiatric bed. -- as a way to prepare them for the next level of care. they have not opposed that change and there is no loss of clement. most importantly i think the services that we will be re-creating the behavioral health center will meet the needs of psychiatric patients and others in the community.

>> thank you. >> supervisor breed: i had two questions. the position being eliminated for the psychiatric social worker position, that is vacant since july, 2011, -- is there a reason why you decided not to fill that position? >> there are many reasons. some of the reasons are that we do get our classifications frozen during the time of deficit. we have a deficit this year; so many times that is part of the process. we never try to close a position. we also have new testing exams that take a long time for dhr to develop so it

is basically timing issue of trying to get all the positions in line and getting them open. at times we have an open req and positions get frozen and we have to go through the whole process all over again. >> supervisor breed: is there not a need for this position? >> yes there is that we have a negotiation with the budget analyst and we clearly see that after two years we would have to let the position go. >> supervisor breed: and -- were you in the process of hiring or trying to fill that particular position? >> that position would be over 100-200 positions, clearly every position is important but some of them take a lot more time to get hired. >> supervisor breed: what are we talking about in terms of timing? >> depends on where it is in the process, we have to open it again and go through the mayor's requisition process

and dhr; it could take another 6-8 months. >> supervisor farrell: i am doing some calisthenics in the back. >> one of the consideration. the apartment has 338 approved positions; one of the reasons why we looked at these older positions and recommended their deletion since they have not been filled -- on the other hand the department testified that there are many new positions in the budget. that was part of the basis of our recommendation. >> supervisor breed: i'm only bring this up because one of the challenges that we have are the mental health issues. i'm concerned about eliminating a position that was clearly need to be filled. we also actually need this kind of position in our jail system currently.

so i have some concerns about eliminating it, and preferred to see it filled and used appropriately because clearly it is a position that is needed. i want to express that and would prefer -- but i'm not necessarily hearing that there are any assurances that it will be filled in a timely manner. >> if i may have our staff we look at these positions and work with the budget analyst's staff to see if there are other things that we can trade for that particular position. will be happy to look at it that way. >> supervisor breed: and the second issue that i get complaints almost every other week when i go to laguna honda, from the residence as well as workers there because the new laguna honda is a different size and the meals are served to the patients there are

definitely an hour, to an hour and a half handy mealtime what it used to be at the old laguna honda. a lot of folks have gotten used to it but it is still a challenge. i don't know if there has been any change or any increase in staffing more and increasing resources with this proposed budget for laguna honda in a way to help with the new challenges of the hospital currently experiencing like meal service for example. >> we certainly can look at it and work with your office on that supervisor. an hour executive director of the hospital i know she is aware of this issue and we start we can report that to you and give you the plan of how it can improve that and i know that's been an issue because of how big the hospital is in the serving of those meals but it is something they want to improve on but we can incorporate your office into that discussion. >> supervisor breed: we know

there are less beds but different configuration. >> and ongoing quality improvement. we'll work with you on. >> another possibility for the committee you could leave the decision authorization to hired this position in the budget and substitute it with an attrition reduction, it would achieve the same savings that the budget analyst is recommended that leave the department the authority to hire the position. >> we would agree with the controller. it would be a good compilation reference to supervisor breed's question. >> it will be the same amount of savings but the position authorization would be less in the budget. >> supervisor farrell: supervisor breed, is that something you want to entertain?

do i have a motion to accept the amended budget analyst's recommendation for the controller suggestion? can we do that without opposition? there are ongoing questions about the budget that we will continue to talk about tomorrow. >> while we have the director here, as we noted at the time we submitted our revenue letter on the mayor's proposed budget, the final state budget had not been adopted. it has been completed. while here we wanted to talk about the most significant part which is the final state budget resolve the question that has been debated for quite a while about how the state intends to implement the affordable care act. totally appropriately 300

million dollars in expense of the state and pain by pulling back 300 million in realignment revenue that currently flows two counties. that grows to 900 million in the second year and it has an impact on the revenue of the department of health budget. in year one, the reduction translates by four-minute to a 17 million dollar reduction. that is the revenue weakness versus the budget before you. in year two there's a formula about how the 900 million dollars in state cuts will be allocated to counties; it will likely be at a minimum 17 million and potentially as high as 48 million. there also uncertainties related to the affordable care act unknown to us at this point.

for example we expect to have more insured population which should improve medical revenue to the hospital. and of course there are other activities going on at the department of public health that we will continue to monitor over the course of the year. what we don't feel that the mayor and the board need to act to address this revenue loss at this time it will be a significant financial risk heading into the budget year and beyond and accordingly under the charter we required to place reserves in the department of health's budget to offset the potential loss in his budget. who identified reserves and expenses that we can hold in both years of them budget equivalent to 17 million in both years and most likely that will be a mixed and we will finalize this for you today; it will be a mix of furniture, fixtures and equipment for the new hospital funded in the budget and potentially other capital projects. will place

those in control as reserves and keep the board updated on revenues as we know more. >> supervisor farrell: any questions for the controller on that? any other questions for mr. rose or ms. garcia. can we take that motion to accept the budget analyst recommendations as revised for the controller suggestion? can we do that without opposition? (gavel) i do see the chief hear from juvenile probation. >> good morning supervisors. chief -- juvenile probation department to inform this body of our belief in the final recommendations that mr. rose's office is provided and we are in agreement and would ask for

your approval of the juvenile probation department's budget. >> supervisor farrell: can go to your updated report please mr. rose? >> we have revised our report on page 68 where we recommended previously 212,927, we are not recommending reductions of 143,088, on page 68. similarly for fy 14-14 recommended 135,566, we are now recommending reductions of 146-- >> supervisor farrell: we have a motion to accept the budget analyst's recommendations? can we do so without opposition? so moved. (gavel).

at this time we have three departments that we have not heard of. starting at 11:30 -- otherwise we'll go to recess. can we speak on item number three? mr. clerk can you call item 3? >> clerk young: (reading) >> supervisor farrell: supervisor avalos, do you want to speak on this? >> supervisor avalos: this is something we wanted to move forward just in case wanted to have a discussion.

we are still far apart, we would like to use the suspension -- (indiscernible) ideally we don't use the budget stabilization dollars, or the budget stabilization dollars are used for closing out, (indiscernible) in case we cannot come to agreement with the mayors office. >> supervisor farrell: if we could could have the controller talk on the item. >> we passed the simple fact sheet on the numbers for your knowledge. the board adopted a financial policy a couple of years ago. as part of a follow-up to proposition a in 2009.

that reserve policy adopted by the board establishes this reserve fed by various volatile revenues, most notably transfer tax. when they exceed a five-year average revenues flow to this reserve m and are available in much the same way that the rainy day reserve is when revenues decline. that same financial policy allows the mayor and the board however to suspend the policy but for the upcoming budgetary by a 2/3 vote. the overall reserve position on page 1 of the handout we are entering -- we expect and the current fiscal year with approximately 127 min dollars in our two reserves, intended to carry a down economic cycles like the one recently worked our way through. in the budget year and the

budget year plus one we are projecting to the possibility to the stabilization reserve and draw money from the rainy reserve for purposes of (indiscernible). --just over 20 million dollars in deposits, ending balances of 147 million dollars. there is a policy itself is in london the -- set the target reserve level equivalent to 10% of revenues and if we exceed 10 percent of revenues the reserve is effectively capped; the reserve flows to the general fund. there is not a magic number here but the best practice is between that range and the reserve policy itself contains

10 percent. you can see that the reserve balances we expect to end this two-year period with total just under 4%, the cities position has improved over the last several years as we recover from the downturn. another way that people talk about stabilization reserves at times is trying to maintain between one and as high as two months reserves. -- as we indicated on the slide there is also a growing general reserve in the budget before you also adopted by the board as part of the financial policy, it surface like a different purpose intended purpose for the policy is to absorb cost increases or revenue declines above and beyond those assumed in the budget within a 12 month

period; we give you that reserve modestly differently. and just the next two slides are illustrations of part of what this reserve is intended to hedge against which is just the volatility of our most volatile revenue in the city which is transfer tax; we talked about this earlier this month. transfer taxes very unpredictable, heavily driven by commercial real estate cycle, it can quickly go up during upturns and quickly down during downturns. this is a significant part of the revenue challenge that we faced in the last recession. as recently as three years ago the general fund budget contained 15 in dollars and transfer tax; the budget before you in the next two years assumes 225 million. we expect as we enter the next downturn to cycle down quickly

as well, it is a hard revenue to predict. on the third slide to concede that the volatility doesn't just stretch across fiscal years; it is hard for us to predict even within the fiscal year so if we look at the monitor returns on transfer tax between the years we just closed, because this is so heavily driven by large commercial transactions we really have stark differences month-to-month. you can see that in december we achieved over 16 million in a single month so it is challenging to take on unexpectedly positive news and serve as a hedge when we have a downturn like the most recently had. it is a bit of context information for the board as you consider this legislation. >> supervisor farrell: supervisor avalos. >> supervisor avalos: thank you

for your presentation. i support the reserves and the financial policy in 2010 going to the ballot and also crazy ordinances before that here with the full board and also worked on authoring an increase in the real estate tax and i feel there is a great groundswell of support to make it happen outside of city hall organized with a lot of communities and labor groups to make sure that the measure passed; a lot of expectations on how those funds will be used. though seven been quite as fulfilled as i thought they could've been. i believe we have a couple of days, hopefully just one day to be able to come to some agreement with the mayor's office on how to reprioritize the budget and it will take some give-and-take. i